California was front-and-center in 2019 for measures to address data privacy and to prevent workers from being miscategorized as “independent contractors.” In 2020, other states are expected to take similar steps to protect workers and consumers, given the slim odds of any major federal legislation passing in an election year.
The California Consumer Privacy Act, which the state passed in June 2018 and amended over the past year, took effect Jan. 1. The law, which is meant to give consumers more agency over their personal data, takes cues from the European Union’s General Data Protection Regulation in 2018.
California’s measure is among the earliest of its kind in the country and comes amid public outcry and increased enforcement attention on tech companies’ handling of user data, perhaps best symbolized by the Federal Trade Commission’s $5 billion fine in July on Facebook.
But such measures have major implications for retailers, which are increasingly tracking customers’ online habits and location data to figure out their movements, spending habits, and preferences, experts said.
“Every retailer is also a technology company,” said Alysa Hutnik, who chairs the privacy and information security practice at Kelley Drye & Warren LLP.
“It’s all about how you reach your audience, and retailers are no exception,” she said. “So what does that mean for interest-based advertising?”
The U.S. doesn’t yet have an omnibus privacy rule similar to the EU’s GDPR, which allows states to fill the vacuum. There are signs of movement in that direction on the East Coast, with legislatures in New York, New Jersey and Pennsylvania contemplating similar measures. In May, for instance, a group of Democratic state senators in New York introduced a bill to require companies to get consumers’ permission to share or sell their information, though the measure appears to have stalled for the time being.
There is also a federal bill in the works, a draft of which the House Energy and Commerce Committee issued in December. While a final version may yet be in the distant future, it’s not clear what it would look like, or whether a federal law would still allow consumers to sue companies over privacy issues, or block states from legislating the same issues.
“With federal legislation in the works, there is still the question of whether it would allow a private right of action for privacy violations — that is, whether it would allow regular customers to bring privacy suits against companies,” said Hutnik.
“There is also the question of whether any federal legislation that passes would preempt any state legislation, or [if it would] establish some level of baseline protections and allow states to build on it with their own laws,” she said.
On the workplace front, California also made waves with its AB-5 legislation, passed in September, that would restrict companies from classifying workers as independent contractors, and which was also set to take effect in the new year.
The measure, sparked by the gig worker model of ride-sharing apps including Uber and Lyft, will prevent companies from categorizing workers as independent contractors if they’re doing work that’s part of the usual course of the companies’ business, according to a copy of the bill.
While companies argue that the independent contractor definition gives workers the flexibility to set their own hours, critics have highlighted the benefits and protections workers lose by not being treated as employees. Independent contractors don’t qualify for the kind of benefits that regular employees do, including minimum wage Social Security, worker’s compensation and health insurance benefits. Independent contractors are also not covered by federal workplace discrimination protections — though some state antidiscrimination laws may apply to them, such as in New Jersey.
Other states are expected to follow California’s example with similar measures to limit the independent contractor definition, and to give rights to independent contractors similar to those full-time employees receive.
“There will be many more states over the course of the next year that implement additional protections for people who we think of as independent contractors,” said Christopher Parlo, coleader of Morgan, Lewis & Bockius LLP’s wage and hour litigation and counseling practice and its independent contractor team.
In terms of federal antitrust enforcement, the Department of Justice and the Federal Trade Commission have both indicated they will take a closer look at digital platforms. The agencies are likely to look at the potentially anticompetitive pursuit of deals and contracts, said Mark Ostrau, who chairs Fenwick & West LLP’s antitrust & trade regulation practice.
“Probably the biggest story of the second half of  and focusing on  is the increasing attention paid to the major tech platforms, and what, if any, enforcement might come of that,” said Ostrau. “At a minimum we’re likely to see that any transactions that the big players plan will get a very close look regardless of the presence or absence of any competitive overlap.”
The FTC also looks into privacy issues, albeit through the limited lens of policing unfair or deceptive practices.
“A lot of the concern people have with the aggregation of data is not so much antitrust, but more privacy and civil liberties,” said Ostrau. “[And] the antitrust agencies are not the best ones to address those concerns.”